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DOL Overtime Rule WILL Apply to All Private Sector Employers

04 Jul

Update Applicable to:Effective date
All private sector employersJuly 1, 2024

What happened?

On June 28, 2024, Judge Sean D. Jordan from the U.S. District Court for the Eastern District of Texas issued a preliminary injunction, blocking the enforcement of the new U.S. Department of Labor (DOL) rule to raise the minimum salary thresholds for the Fair Labor Standards Act’s (FLSA) white-collar overtime exemptions against the state of Texas as an employer. 

What are the details?

Key Bites:

  • On June 3, Texas filed a lawsuit against the U.S. Department of Labor (DOL), arguing that the department overstepped its authority by reclassifying executive, administrative, and professional (EAP) employees as nonexempt based on their salary, rather than their job duties (State of Texas v. U.S. Department of Labor, et. al.).
  • The lawsuit was in response to the DOL’s new overtime rule, which raised the salary threshold for overtime eligibility from $35,568 to $43,888.
  • U.S. District Court Judge Sean Jordan granted a preliminary injunction on Friday, blocking the enforcement of the new rule in Texas.
  • This means that the state of Texas, as an employer, will not have to comply with the new overtime rule, which was set to take effect on July 1, 2024, and only applies to Texas as an employer, not nationwide.
  • The court stated:

In sum, since the EAP Exemption requires that exemption status turn on duties—not salary—and the 2024 Rule’s changes make salary predominate over duties for millions of employees, the changes exceed the authority delegated by Congress to define and delimit the relevant terms, Therefore, these changes to the minimum salary level are likely “in excess of statutory jurisdiction.”

Additional Bites:

  • The 2024 DOL rule will, on July 1, 2024, raise the minimum weekly salary to qualify for the EAP exemption from $684 per week to $844 per week or the equivalent salary of $43,888 per year. The threshold will then increase to $1,128 per week, the equivalent of a $58,656 annual salary on January 1, 2025. Under the rule, that threshold will increase every 3 years based on up-to-date wage data.

Business Considerations

  • Employers should be aware of the recent court ruling that prevents the DOL from applying the new overtime rule to the state of Texas. This decision could have wider implications, questioning the DOL’s power to establish salary thresholds for white-collar overtime exemptions.
  • Employers must still comply with the new salary requirements until a court says otherwise.
  • Employers should review the job duties of their EAP employees to ensure they are correctly classified.
  • Employers should monitor legal developments regarding this issue, as the injunction is preliminary, and the situation could change.

Source References


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